please answer all the parts
Reynolds Resorts is currently 100% equity financed. The CFO is considering a recapitalization plan under which the firm would issue longterm debt with a yield of 9% and use the proceeds to repurchase common stock. The recapitalization would not change the company's total assets, nor would it affect the firm's basic earning power (EBITfAssetsl, which is currently 15%. The CFO believes that this recapitalization would reduce the WACC and increase stock price. Which of the following would also be likely to occur ifthe company goes ahead with the recapitalization plan? 0 The company's ROE would decline. 0 The company's cost of equity would increase. 0 The company's earnings per share would decline. 0 The company's ROE would decline. Question 23 (2 points) 2. Suppose the exchange rate between Canadian dollars and Swiss francs is SF 1.10 = $1.00, and the exchange rate between the Canadian dollar and the euro is $1.00 = 0.68 euros. What is the cross-rate of Swiss francs to euros? O A] 0.43 O C] 0.3.; O m 1.52 O B} 1.41 7] Suppose a rm increases the operating leverage used to produce a given quantityr of output, what will it normally lead to? O a reduction in its fixed assets turnover ratio 0 a decrease in the variability of its expected EPS O a decrease in the standard deviation of its expected EBIT O a decrease in its business risk Rubuulull 'U \\l PUIIIL'l; If the spot rate of the Israeli shekel is 5.51 shekels per dollar and the ISOday forward rate is 5.97 shekels per dollar, then what is the forward rate for the Israeli Shekel selling at? a premium of 18% to the spot rate a discount of 18% to the spot rate2 a premium of 8% to the spot rate 0 000 a discount of 3% to the spot rate Question 17 {2 points] 6} The Roberts Global Ltd. has earnings before interest and taxes {EBIT} of $924,000 per year. The firm has $700,000 of 11 percent coupon interest rate bonds presently outstanding. The indenture on these bonds places a restriction on the amount of total bonds issued by specifying that EBIT must be at least six times greater than total interest paid on the firm's bonds. What is the maximum amount [par value} of new 14 percent coupon interest rate bonds that Reynolds can issue? 0 0) $5.0million O B} $1.25 million 0 c} $550,000 0 A} $700,000 Question 18 (2 points] 1. 0000 Which one of the following statements contrasting options, forwards, and futures is correct? Al C} B) D] Both parties are obligated under a futures contract while only one party is obligated under an options contract. Gains and losses on a forward contract are realized daily while gains and losses on a futures contract are realized only on the settlement date. The buyer of a forward contract pays a premium when the contract is negotiated; the buyer of an options contract does not. Both forward and futures contracts are exercised only if the buyer so chooses. Question 20 (2 points) Raspberry Ltd stock is trading at $36 per share. A put option on Raspberry stock with an exercise price of $33 is available for $2.10. The exercise value of the option is $. while the time value is $. O $3 / $0.90 O $0.90 / $ 2.10 O $0.90 / $3 O 250 / $2.10 Question 21 (5 points)
